Diamond Group - About PUMA

Run a limited corporation with unlimited responsibiilty
2012 Sustainability Report
— Diamond Group

Letter from the CEO
Our vision “to create a happiness enterprise” gives Diamond endless
opportunities to do good for people and the environment. The “happiness” is not
just for customers or potential customers. It also covers our employees, our
shareholders, and people in our local communities, as well as various other
stakeholders and beyond. We believe what is good for society is good for
Diamond. We are passionate about creating a successful business where we act in
a responsible way through small and large actions. It is our way of being, and our
way to spread “happiness”.
our business operations. This integrated approach has strengthened our
sustainability and social responsibility initiatives and our business
performance, by making our manufacturing process and work place more
sustainable, involving with local communities at the grassroots level to build
school and promote local education, helping us recruit and retain the best
talent, enhancing our relationships with our stakeholders, while inspiring our
employees to be there best on the road to achieving double digit growth in every
quarter.
This is why sustainability is very much a core part of Diamond's strategic
direction. Since our first Sustainability Report publication in 2010, our
commitment has not wavered – and 2011 was no exception. Last year's progress
reflects how our commitment to sustainability and social responsibility has
deepened as we have integrated these initiatives into
In 2011, we continued to strengthen our position as a responsible sustainable
manufacturer with our own operations by moving closer to our goal to reduce
energy, water consumption, green house gas, waste water emission, and waste
creation by 5% per year for 5 consecutive years. Over the course of the year, we
also introduced programs to further promote diversity in our workforce as well
as develop our next
1
generation of leaders and talent. Markedly improving our employee satisfaction
and motivation. And new initiatives in funding, building, and even running new
schools and educational programs in our local community, not only promotes the
well-being of future generations, but benefits those we serve – employees,
shareholders, customers, and other stakeholders. Perhaps most importantly, this
commitment has excited and engaged Diamond people all over.
Many of our ambitions and endeavors to create “the happiness enterprise”
involve risks, and we are aware that we will make mistakes along the way. We are
constantly learning new things, and must remain honest about the areas where we
can improve – continuing to share our progress. Thank you for letting us share
some of them through this report. We look forward to continuing with our
customers, industry partners, employees, and stakeholders as we help the world
become a “happier” place.
Sincerely
Bang Y. Lin
President
Diamond Group
2

Contents
About us
About Diamond Group
About this report
Skateholder's interview
Economic performance
Economy
Environment
Energy consumption
Water
Emission of Greehouse
Waste
Effluent
Chemicals management
5
7
8
11
16
17
17
18
19
19
Social
Labor practice and decent work
Employment
Turnover rate
Labor & management relations
Occupational health and safety
Equal pay
Compliance
Human rights
Non-discrimination
Freedom of Association and Collective Bargaining
Child labor
Forced and compulsory labor
Product
GRI
Self Declaration
GRI Content Index
GRI performance indicator
21
23
23
25
25
26
26
27
27
28
29
29
30
34
35
36
3
About us
4

About Diamond Group
We
are a leading manufacturer of high performance athletic, sports, casual,
indoor, outdoor, working shoes and snow boots. Our major customers are PUMA,
MIZUNO, LACOSTE, TIMBERLAND, UNDER AMORE, HEAD, etc.
Founded in 1972, Diamond Group, in Taichung Taiwan, is a private enterprise with
over 15,000 employee world wide, major in Taiwan, China, Vietnam, Cambodia, and
Indonesia.
Diamond Group is headquartered in Taiwan and it coordinates all operations,
such as development, production, logistics and related departments. As we are a
private-owned enterprise, each different level manager has their own different
authority and responsibility according to the business requirement. We have
factories in China, Vietnam, Cambodia and Indonesia, and even have a Puma
developing village in Vietnam. Please see distribution map as follows:
5
This report regards to China area, not including Shoeway. In China area,
there is Taiway sports com. Ltd in Dongguan, Shineway & Shoeway com.
Ltd in Hunan separately. Shineway has four sub factories; they are CDH1,
CDH3, CDH6 and CDH8. Shoeeay is purchased by Diamond in the midyear
of 2010, becoming the outsole factory of Diamond. For a certain limitation
in data collection, this report will not contain Shoeway. All data of this
report come from the financial statistics, Human Resource data and the
environment & human rights data.
Production organizational chart of China area in 2011 as below:
6

About this report
This is the second Sustainability Report issued by Diamond Group and is
Please contact Temper Lin at temper.lin@diamondgroup.com.tw
intended to communicate our sustainability efforts and performance to
stakeholders. The information in this report covers the calendar year for 2011
which corresponds to our financial year. For quantitative measures of
performance, the report includes data for the year 2010 to help readers
identifying trends and year-on-year comparison. Additionally, this report was
prepared using the Global Reporting Initiative's (GRI) G3.1 Reporting
Guidelines, which is the world's most widely used sustainability reporting
Sincerely
framework. We self-declare this report to satisfy the GRI Application Level B.
Feedback
We welcome your feedback on this report.
Temper Lin
S.A.F.E. Officer
Diamond Group
7
Stakeholder's interview
Director of
PUMA staying at
Diamond factory
Michael Yang
He is the director of PUMA who stays at our
factory and audit related things: confirming
whether quality of PUMA shoes are OK;
Participating in trial order meeting of PUMA and
giving guidance; following up settlement of every
new style and guaranteeing quantity producing
smoothly; confirming all material test and its
quality; making sure each operation in producing
is according to SOP; giving guidance for
producing to make sure we can finish the order and
shipment on time.
Staff of
Hunan
Zhu Jide
This staff was recommended into the factory in
Hunan by his friend on February 13, 2012. He is a
worker of printing section. His major job is
reticular and stereoscopic printing.
“ Working at Shineway because of the rational
salary and closing to home. The salary system is
paid by piece, so that the amount of wages is totally
according to personal ability. The salary is open
and fair, what's more, the staff knows the source
and calculation of the salary. Every month, we
choose outstanding staff through public appraisal,
and reward them which will encourage the
rewarded staff and spur the others.”
8

The chief of cutting and stitching section in CDH1.
than RMB350,000 yuan since 2006. It is deserved to be called "love"
“In Dec.12, 2009, I entered into Diamond group again. I'm
enterprises. I believe that the primary school to be found in 2012 will
Cadre of
Hunan
Wei Yong
Diamond group provide a large stage and equal chance to
everybody. When I first come into diamond in October 1998, I
was a worker, loading & unloading the container every day. It's
the company that gives me the chance to cultivate and prove
myself. Though working in a place far from home, we can still
be a high-standard, good quality and high-level school in Lanshan.
This school will cultivate much more outstanding talents for Lanshan.
We hope that Diamond group can introduce advanced teaching idea
and management for our county, and also make great efforts to run a
characteristic school and build development economic zone in
Lanshan. On behalf of citizen of Lanshan and its education, thank you
feel warm and help ourselves.”
for your unselfish help.Meanwhile, I hope that the Pine & Pearl
project will go on. Finally, wish us to be happy in cooperation! "
Taking charge of the overall bureau of education; in charge of
The Chief of
Education Bureau
in Lanshan county,
Yongzhou city,
Hunan Province
Liao Guoguang
leading in enterprise and investment, as well as supervising and
guiding related work of education.
"The diamond is permanent and remote, which spreads forever.
Diamond group has made enormous contribution to education of
Lanshan, especially the launch of Pine & Pearl project, giving
financial aid to poor students of Lanshan. The project has
sponsored over 300 poor students in Lanshan and subsidized more
Tong Hong
Tannery
As one of Diamond Group great split leather supplier, Tong Hong
Tannery always considers environment protection is one of our
major duty and obligation.
“Diamond Group has been making their great efforts to protect
environment and also make improvement, as well as encourage its
suppliers to do it. To reduce the energy consumption and efficiency,
we also invested large sums of money on production
9
equipment improvement such as Y-shape energy saving
drums, 5 layers vacuum drying machine, water recycle
system, steam recycle system, develop new water based PU
transfer coating system...to make sure we do not waste any
precious energy and make our company more sustainable.
Tong Hong also participated in PUMA S.A.F.E program, no
matter on OHS or human right aspects, we are willing to
follow PUMA guidance and make good cooperation with
our customers as well.
It is our great honor to work tightly with PUMA and
Diamond Group to reduce the impact to the environment. It
is our mission and also inevitable responsibility. We
believe there is always room for improvement in Tong
Hong Tannery Group and we are continuously to do so.”
Head of Special
Secondary
School in
Lanshan county,
Yongzhou city
Wang Yunzhong
For school managing, it regards “developing vocational
education and serving local economy” as its guiding
principle for running a school. It tries hard to recommend
c o o p e r a t i o n b e t w e e n s c h o o l a n d e n t e r p r i s e , a n d
successfully run a class named "Shineway Footwear and
management" with Diamond group cooperation.
"It's valuable for Diamond group to set up powerful
cooperation with us to devoted education, as they produce
several ten million pairs of shoes every year. What's more,
Diamond makes great efforts to promote the development of
our school and making investment through "cooperation
between school and enterprise" step by step. Diamond is a
responsible enterprise with development potentiality! "
10

Economic Performance
11
Economy
12000
10000
Out put Val ue ( t en t housand USD)
8819
10255
As footwear moves from Dongguan into hinterland successively, we Diamond
group choose a good place with green mountains and clear waters, Hunan.
8000
6000
4000
6086
Diamond group expands the investment of Hunan constantly, and adjust its
2000
output in Dongguan, keeping China area's whole gross output value increasing by
more than 10% every year. The measures we take are as below: control Man-hour,
promote efficiency, lower the material cost, reduce mistake in calculating
consumption, cut down the stock of the material in process and rational
utilization stock. We are confident to keep 10% in 2012.
Picture I: Tendency of China area's gross output value
0
2009 2010 2011
In addition, while ensuring the increase of annual output, we also make
system of factory profit, Department Amoeba and KPI Index to access the
factory, department and personal performance to set up benign assessment
mechanism among the factories, making enterprises expand and develop
constantly. The system of factory profit mainly examining factory, i.e.
accessing the factory supervisor's performance by actual profit rate of each
month, and also checking the operating state of each factory through the
12

profit, Department Amoeba and KPI Index to access the factory, department and
personal performance to set up benign assessment mechanism among the factories,
making enterprises expand and develop constantly. The system of factory profit mainly
examining factory, i.e. accessing the factory supervisor's performance by actual profit
rate of each month, and also checking the operating state of each factory through the
profit; Department amoeba means calculating profit state based on monthly data of each
department. Personal KPI aims to access state of individual work, based on
accomplishment ratio and wrong rate of his routine work of every month. The above
three items can help individual finish his own work errorless and in time, at the same
time, can check profit state of the department , and even control the cost of the
department well.
We will improve the insufficient for above mentioned. Regarding group's annual goal
as the theme, we should reach the index goals ahead, and prevent from influence on the
index of output benefit in advance. We will finish our community responsibility, in a
situation that making a profit.
The company has been adhering to the principle of equal employment all the time
in the staff recruit, do not assign to the race, the age, sex, religion, faith, etc., offer
fair employment opportunity to applicant, and provide more managing jobs to the
local staff. Local administrative staff rate is 66% in the wholly administrative staff
at present, compared with 2010, have rise by 8%, which means giving local staff
much more chance to study and self-promotion.
Picture II: Contrast of administrative staff between in 2010 and 2011
40
37
30
19
19
20
14
10
0
2010 2011
Chinese
Taiwanese
13
Environment
14

Environment
The environment is the condition that the mankind depends on for existence, and also the
foundation of human development. As a member of earth village, we have responsibility
and obligation to protect the ecological balance and environment, and also aim to protecting
environment and taking action starts from me. We formulate environmental performance
indicator based on related environmental regulation and requirement, the consumption of
water and electricity, the stationary and hazardous emission reduced firmly by 5% each
year; the emission & effluent is up to standard; No complaint on environmental pollution. In
order to guarantee the Environmental Management can be carried out effectively, we take
great measures as below: reach the environmental management objectives and prevent the
emergence of calamity incident by making a system named Environmental Monitoring and
Measuring Management; Standardize the management of company effluent & emission &
waste & chemicals through regulations; collect and analyze Environmental-KPI data every
month, then make the key indicator public in monthly meeting and ask Occupational Health
& Safety Commission to analyze and self-criticism. Of
course, we also make knowledge of environmental protection widely available, such as
in orientation training, officer's on-the-job training, the manual of staff, etc. In 2011,
aiming to strengthen staff's awareness of environmental protection, we start to specify a
whole month to giving publicity to environmental protection; open a course of
chemicals management and chemicals omission exercise half a year. Making shoes for
over 30 years, we clearly know the important of environment. So we give priority to
environmental protection material; produce green products; even introduce advanced
technology to reduce the consumption of energy and environmental pollution.
Main material proportion of China area in 2011 is as follows:
Major Materials of China Area in 2011
22%
Leat her
PU
53% Fabr i c
17%
Foam
8%
15
Energy Consumption
The total amount of China area's energy consumption in 2011 is 10,423,112kwh,
among which 85% (8,859,645 kWh) is for production, and the other 15% (1563467
kWh) is for daily life. The power consumption of one pair of shoes is 0.97kwh. It is
the goal that we continuously reduce power consumption by 5% each year. We
establish “Energy Management Program”, " Regulations of Air Conditioner
the power consumption. In 2011, we changed into using energy-efficient LED
light which can reduce power consumption 56.55kwh every day, 1187.55kwh
every month and 14250.6kwh every year; Adapting 10 traditional electric heat
oven into infrared oven, which can save 17kwh one day (one set in 8h), 170kwh
10 days (ten sets in 8h), 3740kwh every month and 44880kwh every year
Management” & “Regulations of Power Management” to control power for work
and daily life. At the same time, we ask our staff to shut down the power when go off
work, the cadre has to double check whether all power is closed; arrange security
Comparison Chart of Power Consumption in China Area between in 2010
and 2011 (Unit:kwh)
guard and cadre on duty in the daytime, and senior manager on duty at night to
guarantee all power is closed, thus reducing unnecessary waste. We have priority to
purchase the energy-efficient products and do a good job of resource recovery;
15,000,000
10,000,000
5,000,000
12,809,035
10,423,112
2010
2011
install the solar water heater in senior manager's dormitory; utilize remaining
energy of the air compressor to boil water for staff having a shower, greatly reducing
16
0
2010 2011

Water
The
3
total amount of water usage in China Area is 360,560 m in 2011, among which 98%
3 3
(353,349 m ) is for daily life, and the other 2% (7,211 m ) is for production. There is 80% waste
water can be recycling through the sewage disposal device, mainly used to water flowers and
plants every day, spray roof for cooling, and wash the bathroom. In order to guarantee the water
consumption reduced by 5% every year, we standardize water usage through “Energy
Management Program”, install energy-efficient water halter to reduce the amount of water
consumption, and arrange security guard & cadre on duty to inspect the whole factory's water
usage, thus reducing the unnecessary waste. AS Shineway expand its production and construct a
factory building for two Assembling lines & Sample department, including cutting, stitching
and assembly, the total water consumption added by 0.23% in 2011, compared with 2010. We
will continuously improve it and try best to reach the goal 5%.
361,000
360,500
360,000
359,500
359,000
Comparison Chart of Water Consumption in China Area between in 2010
and 2011(Unit:m3)
359,731
2010 2011
360,560
2010
2011
Emission of Greenhouse
As one of the main greenhouse gas, carbon discharge (CO ) has been universally
2
condemned for its large amount of discharge with aggravation of the human activity,
causing global warming and some other environmental changes of the climate. Since
2009, the energy-conservation lights have taken over the fluorescent lamp saving power
35% everyday; use infrared oven instead of traditional electric lamp can save power
40% everyday; install solar water heater in senior manager's dormitory can save 80%;
altering air compressor into energy conversion machine and reusing the remaining
energy have a distinct energy-saving effect. We are always trying our best to reduce
discharge of CO . In 2011, we changed into using energy-efficient LED light which can
2
reduce power consumption 56.55kwh & discharge of CO 0.045 tons every day, 0.936
2
tons every month, 11.234 tons every year; Adapting 10 traditional electric heat oven into
infrared oven, which can save 17kwh one day (one set in 8h), 170kwh 10 days (ten sets
in 8h); reduce discharge of CO 2.814 tons every month, 33.771 tons every year. The
2
total discharge of CO is 8,202.435 tons in 2011, dropped by 18.7%, compared with
2
2010.
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Waste
12000
10000
8000
Comparison Chart of CO 2 Discharge in China Area between in 2010 and
2011(Unit:ton)
6000
4000
2000
0
10097.473
2010 2011
8202.435
With the increasing of population, the development of economy and the improvement
2010
2011
appoint a worker to collect it twice to be put on the rubbish place every day. The
waste with no dangerous account for 98% between recycling & unrecoverable offal,
to be handled by the local qualified recycle bin; the waste with dangerous only
account for 2% between recycling & unrecoverable offal, to be handled by qualified
organization which specify recycling to avoid aggravating the danger to the
environment because of dealing with improperly.
of the people's lives, more and more rubbish endangering the environment that we are
depending on for existence. We try our best to reduce damage to the environment by
lowering the quantity of the rubbish. For living garbage, we demand to forbid using the
disposable bowls & chopsticks and plastic bag; install drinking fountain at every
workshop to prevent the staff buying the bottled water; fully utilize recycled writing
paper to reduce white pollution. For industrial rubbish, we specify a place to leaving
rubbish. Classify the rubbish produced in production process to be recycled, and
Classification and Recycling Ratio of China Area's
Effluent in 2011
1%
2%
0%
2% 2%
93%
Recycled paper / cardboard
Recycled fabric
Recycled effluent without hazardous
Effluent without hazardous cannot be
recycled
Recycled effluent witht hazardous
Effluent with hazardous cannot be recycled
18

Effluent
In the shoes manufacturing industry, the industrial sewage mainly produced by printing. For our
company, all printing of the products are finished by our co-operate factory. That is to say, 99%
of effluent comes from daily life, and the other 1% is industrial sewage produced by waterwashing
machine of outsole manufactory. We invite organization specifying in recycling to give
an estimate and help us set up the pipeline to make effluent flow into the specialty barrel alone,
and then to be cleared up regularly by the organization, which avoids environmental pollution
caused by leaking or improperly management.
Chemicals Management
90% of chemicals we used comes from suppliers which appointed by our customer, and the
other 10% is from the supplier screened strictly by purchasing department with analysis
according to the regulations of ISO19001; but the chemicals will not be used until the trial
products with chemicals pass the laboratory test. For chemicals management, there is an
independent chemicals warehouse equipped with spray type fire extinguisher, pneumatic
ventilation facilities and protective equipment; and also with Material Safety Data Sheet
(MSDS) and List of Chemicals on the wall. All chemicals are classified and preserved with
secondary protection. For chemicals use, there is also an independent room to mix glue with
spray type fire extinguisher, pneumatic ventilation facilities, protective equipment and
MSDS, as well as thermometer and shower device. The operator is asked to wear on all the
protection equipment when mixing glue. The chemicals used online all mark MSDS, and the
worker must wear protected gloves and carbon gauze mask; each shaping line is furnished
with eyewash platform. For instance, anything get in touch with chemicals, such as glue
brushing, chemicals container, cloth used to wipe chemicals, etc., are regarded as dangerous
waste, to be collected and retrieved by the qualified recovery organization. All people get in
touch with chemicals have to attend pre-job training; invite manufacturer of glue & potion
to hold a training meeting for chemicals management & use & leaking twice a year. We
forbid using chemicals contain benzene, toluene, trichloroethylene, trans-dichloroethylene,
etc. to ensure the products' security. Regarding good quality of products as competence, we
have priority to adopt the water based instead of solvent based in order to reduce the
influence on environment. There is zero injury or leaking accident caused by improper
management or use of chemicals so far.
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Social
20

Social
Labor Practices and Decent Work
People's benefit comes first which is Diamond group's core culture. We aims to
"Thinking and worried based on staff and the staff's success is our company's
achievement." We care about every employee's growth and their future. We keep our
staff not only by treatment, but also by career and emotions. Every employee can get
respect and justice to enrich both their soul and fortune. There are many associations
(i.e. computer, song and dance, and basketball, the painting & calligraphy and English),
library, clinic, trade union, minitype super market, Internet cafe and various kinds of
recreational facilities (i.e. table tennis, badminton, basketball, billiards, etc.) for the
staff to enjoy work and living. We hope that our staff can cultivate themselves and make
contributions to the company, and even the society.
The system “The Standard Management of the Wages” is made by Planning
Department and agreed by the representatives of staff and trade union to put into
practice. The structure of the wages is as follows: Salary should be paid = Basic
wage + overtime pay + performance bonus (efficiency bonus + technological bonus)
+ multi-functional working skills bonus + seniority/meal allowance + outside
lodging subsidy; In the meanwhile, Shineway paid by hourly or output bonus
payment system, and choose which one is higher to pay. The staff can check their
salary and if there are any questions, they can find the help from their supervisor or
trade union.
In order to encouraging new staff to grasp the technical ability and know the
environment well as soon as possible, we arrange the cadre in the same line to help
them. Human Resource Department and Planning Department set up a bonus system
for those stuff who pass the working skills exam; who grasps working skills quickly
as a rookie. How much can the cadre get the bonus based on assessments from his
supervisor and the new employee he teached: if excellent, the bonus will be RMB60;
if good, that will be RMB50; if qualified, that will be RMB40. One month later,
when the new employee gets qualified in the probation period, he can get bonus
RMB50; if not qualified, he has to leave the company.
21
Human Resource and Logistic Service Department hold new employee's discussion
once every half a month; hold a discussion twice every two months for those who have
been in the company for 2 month or 6 month or even 2 years. The holder writes down
some questions the staff reflecting, and then announce it when solve the problem. Any
employee can supervise the whole process of handling problem until it is well solved.
Human Resource Department set up a system “Standard of Education and Training
Management” providing a chance to study and prove for staff. All staff needs to attend
New Employee Orientation, Induction Training, and even On-the-job Training
according to different post demands. The company will hold one or two training courses
to select cadre every year, anyone can enroll in the course according to his own
willingness and ability. If qualified, the trainee can be promoted in three month later.
Every employee fully possesses the right of freedom of association. In order to help
staff cultivate themselves, improve their life quality, and realize the goal "healthy,
happy and new life", the Trade Union formulate the system “Methods of Associations
Management” with a purpose says " serve for staff's life; serve for company's
development; serve for staff's improvement and development”. In the dull season of
production, the associations hold much more activities, so that most of staff can
participate in.
The company cares the health and safety of stuff, gives special treatment to the
disadvantaged, and also set up the system “Methods of the Disadvantaged
Management”. For the Juvenile Workers, pregnant woman and disabled person, we
adjust their post and control their over time. Human Resource Department
announces overtime notes and post details of the disadvantaged every week.
On the day of Dragon Boat Festival, the Mid-autumn Festival or Spring Festival,
the Trade Union will give gifts to the staff, making the staff feel the joy just like at
home. We hold the birthday party for stuff each quarter, large-scale sports meeting
and Spring Festival Party every year. Moreover, in order to make staff together with
their family when coming off work, Shineway started to arrange shuttle cars for
their working on in 2009. There are 13 shuttle cars for 500 employees in 2011. The
company will plan activity and welfare of this quarter for staff on Trade Union
Congress each month.
22

Employment
There are around 6,000 employees of Taiway and Shineway in 2011. Comparing with 2010, the
number increases about 1,000. The staff are mainly distributed in the province of Hunan
(60.13%), Henan (14.52% ), Sichuan (8.63% ), Hubei (4.25% ), Jiangxi (3.01% ), Guizhou
(1.46% ), and Guangxi (1.99%) . The proportion of staff in Hunan is the highest, because there
are many factories in Hunan. And the others' proportion, such as Guangdong, Shanxi, Fujian,
Yunnan, Shandong, Zhejiang, Jiangsu, Hebei, is smaller than 1%, so that they will not be listed.
Turnover rate
The flow of personnel is much bigger, because the majority of people prefer to work at
hometown for more and more factories moved into hinterland in 2011. China's New Year is
nearly on Februarys every year. In order to enjoy and celebrate the New Year holidays, most
employees choose to leave their jobs temporarily, leading a peak period of personnel's loss in
February each year. Though we give staff an alternative holiday, grant bonus of Spring Festival
to prevent person's loss, the loss rate is still higher than any other months. The average turnover
rate of 2010 is 8.89%, compared with 2011, dropped by 1.66%. Please see the monthly turnover
rate in 2010 & 2011 as below.
25.00%
Sichuan:8.63%
Henan: 14.52%
Hubei: 4.25%
Jiangxi: 3.01%
Hunan: 60.13%
20.00%
15.00%
10.00%
5.00%
21.92%
12.64% 12.56%
12.10%
10.49%
8.20% 9.11% 9.40% 10.00%
8.48% 9.82% 9.53% 8.52% 9.04% 10.55%
9.20%
7.50% 8.10% 8.44% 8.60% 7.90% 8.12% 7.86% 7.78% 7.96% 8.89%
2010
2011
Guizhou: 1.46% Guangxi: 1.99%
0.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ave.
23
Among the terminated employees, the age of 18 to 35 accounts for 77.19% of the total; 35 to
45 accounts for 21.63%; the others account for 1.18%. The same as in 2010, the age of 45 is
relatively stable because of the limitations of age and working opportunity. The staff with age of
18 to 35 is the floating population and most of them leaving office because of family factors.
Turnover rate by Age
12.00%
12.00%
9.09%
10.00%
8.00%
6.04%
6.00%
4.65%
4.00%
14.00%
12.00%
12.00%
10.56%
10.00%
9.84% 10.00%
9.09%
8.00% 8.33%
2011
6.00%
6.04%
2010
4.65%
4.00%
2.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
68.50%
Female
67.40%
31.50%
Male
32.60%
2010
2011
2.00%
0.00%
16-18 18-35 35-45 45+
0.00%
16-18 18-35 35-45 45+
In 2011, we offered more than 6,000 jobs. Jobs in footwear are major stitching and it is
considered as women's work in China. In 2010, Diamond Group had 68.5% female workers and
31.5% male workers; in 2011, 67.4% female workers and 32.6% male workers. It is relatively
difficult to recruit, because more and more people go back to home to get a job recently. In 2011,
we recruited much more male workers, for the male is much fit for cutting and lasting.
Training for Cadre Training for Cadre Sports meeting
24

Labor & Management Relations
In 2011, we recruited the Juvenile Workers, pregnant woman and disabled people
protected by Collective Agreement. Juvenile Workers are engaged in the appropriate
posts as per national laws and regulations; their overtime cannot exceed 36 hours in
one month; they will have the physical examinations before work, one year later and
the age of 18. The pregnant woman can't work in non-working day, or be engaged in
jobs under taboo. Moreover they have the right to enjoy maternity leave on the basis
of national regulations; apply for meal & lounge special for pregnant woman; get
consolation money of RMB600. The disabled people are forbidden to engage in the
special jobs or work in non-working days; if they are unable to do their jobs because
of disabled, the company will arrange the suitable posts for them after consulting.
Besides, the company grants RMB360 to the disabled every year. The proportions of
Juvenile Workers, pregnant woman and disabled people are as below:
The total number of proportion
0.50%
0.41%
0.40%
0.30%
0.27%
0.20%
0.14%
0.10%
0.00%
Minor Pregnant woman Disabled person
Occupational Health and Safety
The company pays attention to the staff's life safety and health, and set up a Council
for Environment, Health & Safety, called EHS for short. There is a training course of
health & safety for new staff. We provide PPE for labor protection (glove / earplug
/gauze mask wait); give an annual physical examination; offer herb tea in summer.
There is also a regularly inspection for machinery equipment everyday. Medical kits
are placed at each workshop with personal management. There is no occupational
disease or death caused by industrial injury in 2011, but few industrial accidents
resulted in improperly operations, accounting for 0.83% of the total number of staff in
2011; the days of absence from duty account for 0.06% of total attendance days. Here
is the proportion of industrial injury in 2010 and 2011.
25
Equal Pay
1.00%
0.83%
0.80%
0.71%
0.60%
0.40%
2011
2010
0.20%
0.06% 0.05%
0.00%
Industrial scale Industrial accident rate
The company runs a system paid by hourly or piece, on the basis of the principle, equal pay for
equal work and distribution according to work. We pay the salary in fully accordance with
national laws and regulations, transfer wages into staff's bank accounts on the 25th every month
with salary details sheet signed. All staff has the right to enjoy a sick leave, annual leave,
marriage leave, funeral leave, and other legal holidays leave with paid. Workers' monthly salary
is about RMB1800 yuan to RMB3000 yuan. But the male workers' salary is higher by 12% than
female workers', because of physical capacity for some skilled jobs, such as toe lasting, side
lasting, heel lasting and sole sticking in Assembly; as earlier mentioned, there is technological
bonus in staff's salary, and male workers' technological bonus is relatively higher than female's
as due to their skilled jobs. As a result, male workers' salary is higher.
Compliance
The company is strictly in compliance with national laws and regulations; work out
perfect systems of recruitment management, including Management System of Labor
Contract, System of Wages and Welfare, to ensure and uphold the rights of staff; select
representatives of Trade Union in each department to offer avenues for staff to express
demands and even develop staff's informal discussion; add seven mailbox in living area
to promote communication between the staff and administrator. In order to make it
convenient for staff leaving office, a turnover mailbox is added, too. After probationary
period, the staff can leave office in one month later, so long as he makes an appointment
of turnover. So, any staff can leave office based of regulations, if he wants to. The
company has not violated the laws and regulations in 2011, just the same as in the past.
26

Human Rights
Article I of “Universal Declaration of Human Rights” says: “Everyone born free and
equal in dignity & rights". On the basis of Article I, we establish a SAFE organization to
supervise and restrain all factories should observe and ensure all regulations of human
rights. In order to guarantee that the human rights standard could fully carry out, every
year, we arrange at least two training courses to promote cadre's cognition of human
rights, thus avoiding improper management leaded by the lack of human rights
cognition. We extract relevant human rights standard and grievance-redress mechanism
into staff's manual and training material for new staff, making all employees understand
and use the power of human rights. We have systems to standardize the freedom of
association and collective bargaining, child labor, non-discrimination, forced and
compulsory labor. Moreover, we set a performance indictor of human rights, i.e. zero
Non-discrimination
We totally observe stipulations of “Convention No. 111 ", do not assign to the race, faith,
age, sex, religion, political view, sex orientation or the position, etc. in recruitment, and
offer the equal employment opportunity without collecting any expenses; we totally observe
“Convention No. 111 " regulation says equal pay for equal work between male and female
workers. In order to guarantee that the staff can be fully respected in their jobs, we work out
the "System of No Harassment, No Discrimination and No Retaliation", clearly stipulating:
in the job, no one will be discriminate against for the difference of sex, age, race, religion,
marriage, physiology, surname, district, religious belief, etc.; If any staff feel discriminated
against, he can complain by the help of SAFE group, HR, Trade Union, mailbox (manager's
mailbox, director's mailbox, COO mailbox, S.A.F.E mailbox, etc.). Verifying the complaint
through investigation, we will give administrative penalty to the person liable. There is zero
discrimination case in 2011, same as in 2010.
Comparison Chart of Discrimination Case between 2010 and 2011
child labor, discrimination and compulsory labor, to check if the factory is in
accordance with human rights.
5
4
3
2
1
0
0 0
2010 2011
2010 2011
27
Freedom of Association and Collective Bargaining
We totally comply with regulations of “Convention No. 87”, and all staff can enjoy the
right of freedom of association. We set up “Methods of Associations Management” to
help employees form associations freely. There are 9 associations now; they are football
club, basketball club, song and dance club, badminton club, computer club, English
study club, painting & calligraphy club, Rose club for assistants and Bamboo club. The
total number of association member is about 400 in 2011, accounting for 7% of the total
in China area. Comparing with in 2010, it is up by 1.2%.
can put forward their requests for wages to company for salary adjustment,
welfare improving and working environment improving. The draft agreed by
both of them can be implemented when it was passed by the Trade Union
Congress. On February 28, 2011, staff of Shineway put forward the collective
bargaining in comprehensive performance award (named Attendance Bonus),
and then the attendance bonus is raised to RMB100 from RMB50 per month after
reaching a consensus through collective bargaining. As a result, the overall
salary raises about 4% (hourly wage was RMB1100, plus the attendance bonus
RMB100 is to RMB1200, increased 9%; piece wage was RMB1600, plus the
400
380
360
340
320
2011 年 與 2010 年 社 團 人 數 對 比 示 意 圖
400
352
2010 年 社 團 人 數 2011 年 社 團 人 數
2010 年 社 團 人 數
2011 年 社 團 人 數
added attendance bonus RMB50, is to be raised by 3.1%).
We make “Equal Consultation and Collective Contract System" to coordinate the
relations of labor and management; to safeguard worker's labor rights and interests; to
arouse the enthusiasm of workers to promote the development of company. The staff
28

Child Labor
The child labor refers to being under the age of 16, working in the enterprise and getting
economic incomes. We totally observe the stipulations of “Convention No. 182", "Convention
No. 138" and "Convention No. 79", never hire the worker who is under the age of 16. Some
applicants use fake ID card for various reasons. For those people, firstly, we arrange
experienced personnel engaged in recruitment to discern ID card; secondly, use ID
identification device from the Police Department to discern it; then discern and filter it through
reporting system of floating population linking with public security organization; finally, ask
staff to apply a bank card for wage in Postal Bank and the clerk can help us to discern and filter.
The inspection and discernment of public security organization and the bank help us thoroughly
prevent misapplying the child labor. We did not hire any child laborer in 2011 or in the past, and
will not in the future.
Comparison Chart of Child Labor's No. between 2010 and 2011
5
4
3
2010 2011
2
1
0 0
0
2010 2011
Forced and Compulsory Labor
We totally abide by the stipulations of "Convention No. 29 " and "Convention No. 105 ", do
not force staff to working, respect and safeguard the dignity of human personality in the
workplace, do not adopt any kind of forced labor, harasses, maltreats or corporal
punishment. We insist on preventing forced and compulsory labor by following methods: a:
follows the voluntary principle, does not collect any registration fee while recruiting the
staff, will not force anyone to come to the company, will not withhold any certificate; b: on
quitting time (including noontime), the staff can come in and go out of the factory with
wearing recognition card; c: on working time, the staff can ask for leave by filling a form and
go back to dormitory to have a rest, while he is ill or has something emergency; d: toilet time
is unrestricted on working time; e: only when the staff agree to and sign a sheet of voluntary
overtime can arrange them work overtime. f: transfer wages to staff's account on the 25th
every month without delay or mortgage, avoiding bonded labor; g: probation staff should
apply for leaving jobs 3 days in advance, while formal staff should 30 days in advance, then
labor contract can be cancelled; in addition, the staff can leave jobs timely if he has
something important or emergency. h: provide a channel for appealing, such as S.A.F.E
group, HR, Trade Union, Mailbox. Verifying the complaint through investigation, we will
give administrative penalty to the person liable or even fire him in serious casement. There
were no cases of forced and compulsory labor in 2011 or before.
29
Product
With the development of social economy, people's quality requirement of products is not only
for using but also for the security of the products, healthy, hygiene and environmental. In order
to meet the constantly increase of consumer demands, and also to protect the earth through
energy-conservation and emission reduction, we Diamond Group pay much attention on the
quality policy like: "Give great priority to the customer; focus on the quality; improve
constantly; pursue being apex.” Continue to deepen construction of the ISO9001 Quality
Management System, strictly control the quality in the engineering, materials procurement,
manufacture and shipping inspection, to exceed the customer's expectation, reduce scrap and
waste.
To ensure the material quality, safety and protection by selecting, managing and monitoring
our supplier. We are not only giving the materials to the relevant authoritative department to
make harmful substance test, but do basic inspection and physical properties test in our own
Testing Department.
For the new style shoes, we have specialized engineering staff who carry on the trial of each
stages, and have a meeting to discuss questions occurred in trial process to prevent impacts on
quality and output. And our engineering staff will make a standard named “Introduction of
Production Process”, and SOP for production department.
In mass production, we prefer to choose the outstanding staff, namely, all staffs need to be
trained before on duty (educate the quality idea, customer requests and standard), ensuring
that they have the ability finish their jobs. In the production process, for different style, we
need to advocate the focal point of quality and precautions to the staff again. For semimanufactured
and finished goods, we have a specialized QC group to supervise, guide and
inspection; the uppers, found to be unqualified should be redo and cannot be flowed into the
next section until it is qualified in inspection. Then write down problems and quantities for
bas quality, to be gathered and examined quality KPI. And then review it on the meeting at
the end of the month.
In order to ensure the quality of shipping shoes could reach customer's requirement, we
set up QA group to examine the finished shoes. If founding defected shoes, QA will ask the
production line to repack immediately. When passing the re-inspection, the finished shoes
could ship out. QA will record the defected and secondary grade shoes. Repack data will also
be recorded on the sheet and the person liable has to provide a report about it. This data sheet
will also be gathered at the end of the month. Then have a self-improvement on the meeting.
After shipment, if any customer or consumer find quality problems, Sales department
will deal with the problem and pay the claim depend on situation. At the same time, we will
feedback to the production department liable to prevent the same problems happen.
30

1. For the suppliers winning the biding, both in 2010 and 2011, the audit rate of
qualification is 100%; the qualified rate of material is 98.9%; the qualified rate of physical
test is 97.99%; the overall result makes a progress comparing in 2010, but has not reached
goal of 99%. Please see the data as following:
Qualified rate of physical test
97%
98.00%
99%
2012
2010
Goal
98.50%
Qualified rate of material
97.80%
99%
Audit rate of qualification for
suppliers wining biding
100%
100%
100%
96% 96% 97% 97% 98% 98% 99% 99% 100% 100% 101%
In order to increase the qualified rate of materials and physical test, the company takes
great measures as below.
First of all, strengthen to assess the material suppliers through arranging purchaser to
patrol their factories: a. to check if their production facility is perfect or qualified; if they
have enough source materials for goods; if their quality system is perfect; if detection device
is up to standard; if their source material is qualified; and any other conditions,
31
such as surrounding of factory and warehouse, financial status, delivery schedule is
steady or not, the price is rational or not, etc.. Moreover, we will reward and punish
according to the results of assessment.
Results of accessing for supplier both in 2010 and 2011:
2010 2011
No. Name of Suppliers Goods
Scores Grades Scores Grades
1 EverTech Outsole 89.87 A 89.8 A
Grade Scores Proposal
A 80~100 Increase orders as per circumstances;
Enjoy the priority to develop samples.
B 60~79 None.
C 60 Cut down orders as per circumstances;
Cancel its purchasing application
without improvement within limited
time or being C grade twice
continuously.
Secondly, enhance to confirm the samples before mass production. When founding
the sample is unqualified, the purchaser will notify the supplier, ask them to improve it
and deliver sample goods to us again. If it is still unqualified, we will cancel its
qualification.
2 Try On Outsole 88.16 A 88.16 A
3 Planbase Outsole 92.56 A 92.56 A
4 Fitday Outsole 92.83 A 92.83 A
5 Yin Hua Lasting 98 A 98 A
6 SanFang PU 96 A 90 A
7 PrimeAsia Leather 95 A 98 A
8 TongHong Leather 93 A 87 A
9 WeiShen Insock 91.8 A 91.8 A
2. Please see the results of assessment in 2011 for quality performance in
each production process as below. Among which repair rate in stitching,
scrapping rate of finished & semi-manufactured shoes, Secondary grade rate
in inspection are within target zone, but repack rate in Assembly is not. Here is
the data:
32

11.0%
9.0%
7.23%
8.0%
11.17%
8.12%
Goal
2010
2011
materials timely before production;
3> The workers have to observe the correct SOP and manual of production
procedure in production;
7.0%
6.0%
5.79%
4> The cadre of QC has to patrol workshop to pinpoint problems and deal
5.0%
3.0%
3.2%
3.54%
2.6% 2.76%
with it in time; if it is serious, the cadre can demand to stop production and
then reorganize it. The production line can start to until the problem is
1.0%
0.39% 0.21%
0.1% 0.08% 0.06%
solved.
-1.0%
Repair rate of
stitching
In order to make the repack rate in Assembly within target area in 2012, the
company will take great measures as below:
1> Resolve all quality problems completely appeared in the process of
developing and trial;
Repair rate of lasting
Scrapping rate of
finished & semimanufactured
Repack rate
B-grade rate of
inspection
5> Discovering the same quality problems are appeared many times, the
QA can request the supervisor of this workshop to find out cause and make
an improvement; if not be improved in time, the QA will hand in a notice of
unusual quality and trace it.
6> The inspector needs to patrol the workshop to pinpoint the problems and
then handle it in time.
2> Strengthen quality control since purchasing materials, reject unusual
33
3. The results of complaint, incurring expenses, in 2011 as below:
Date No.
Amount of
Money USD
Points Reasons Solutions
Damaged on
Feb. 2011 1 1089.11
Great force on tongue Tongue has been changed into 3D
stitching and turn
because of stitching and turn. tongue for future orders.
portion
Improper operation of
brushing in Assembly and Strict requirement on brushing and
Bonded in outsole
over high gesture when sole pressing timely
sticking outsole
Jun. 2011 1 542.75
Change materials. And then
Yellow on vamp of Yellow on vamp because of
transfer to Vietnam factory because
LACOSTE material bleeding
of high cost.
Jul. 2011 1 95.15
Surface on foxing and outsole Prove process when complaint
Bonded in outsole
is too small resulting lack of occur and increase pressing force.
of LACOSTE
force
Orders have been transferred
Amount 3 1727.01
In order to avoid customer complaint, the company work out the "Customer Complaint
or Reject Operation Introduction" to standardize procedure; ask the department liable to
plan a improvement measures , to be regarded as the basis of KPI assess for the cadre , to
reduce the probability of customer complaint and compensation.
Self Declaration (Application Level)
I hereby declare that to the best of my understanding this report fulfills the
requirements for a GRI G3.1 Application Level B.
34

GRI Content Index
S tra te g y a n d A n a l ys i s
P a g e
1 .1 S ta te m e n t f ro m th e m o s t s e n i o r d e ci s i o n m a k e r 1
1 .2 D e s cri p ti o n f o r m a jo r i n f l u e n ce , ri s k a n d o p p o rtu n i ti e s 1
O rg a n i z a ti o n a l P ro f i l e
2 .1 N a m e o f th e o rg a n i z a ti o n 5
2 .2 P ri m a ry b ra n d s , p ro d u cts a n d / o r s e rvi ce s 5
2 .3 O p e ra ti o n a l s tru ctu re o f th e o rg a n i z a ti o n 5
2 .4 Lo ca ti o n o f o rg a n i z a ti o n ’s h e a d q u a rte rs 5
2 .5 N u m b e r o f co u n tri e s w h e re th e o rg a n i z a ti o n o p e ra te s 5
2 .6 N a tu re o f o w n e rs h i p a n d l e g a l f o rm 5
2 .7 M a rk e ts s e rve d b y th e o rg a n i z a ti o n 5
2 .8 S ca l e o f th e re p o rti n g o rg a n i z a ti o n 5
2 .9 S i g n i f i ca n t ch a n g e s d u ri n g th e re p o rti n g p e ri o d re g a rd i n g s i z e , s tru ctu re , o r o w n e rs h i p 6
2 .1 A w a rd s re ce i ve d i n th e re p o rti n g p e ri o d 2 8
R e p o rt P a ra m e te rs
3 .1 R e p o rti n g p e ri o d 7
3 .2 D a te o f l a s t re p o rt 7
3 .3 R e p o rti n g cycl e 7
3 .4 Co n ta ct p o i n t f o r q u e s ti o n s 7
3 .5 P ro ce s s f o r d e f i n i n g re p o rt co n te n t 7
3 .6 B o u n d a ry o f th e re p o rt 6
3 .7 A n y s p e ci f i c l i m i ta ti o n s o n th e s co p e o r b o u n d a ry o f th e re p o rt 6
3 .8 B a s i c o f re p o rt 6
3 .9 M e th o d s a n d m o d e l o f d a ta m e a s u re m e n t 6
3 .1 2 G R I C o n te n t I n d e x 3 5
3 .1 3 P o l i c y a n d m e a s u re ta k e n f o r o rg a n i z a ti o n ’s e xte rn a l e xa m i n a ti o n f o r re p o rt N o n e
G o ve rn a n c e , C o m m i tm e n ts a n d E n g a g e m e n t
4 .1 G o ve rn a n c e s tru c tu re o f th e o rg a n i z a ti o n 1
4 .2 I n d i c a te w h e th e r th e C h a i r o f th e h i g h e s t g o ve rn a n c e b o d y i s a l s o a n e xe c u ti ve o f f i c e r 2
4 .3 W h e th e r o rg a n i z a ti o n h a s a u n i ta ry b o a rd s tru c tu re 5
4 .4
M e c h a n i s m s f o r s h a re h o l d e rs a n d e m p l o ye e s to p ro vi d e re c o m m e n d a ti o n s o r d i re c ti o n to th e
h i g h e s t g o ve rn a n c e b o d y.
4 .5 B a s i s f o r i d e n ti f i c a ti o n a n d s e l e c ti o n o f s ta k e h o l d e rs w i th w h o m to e n g a g e 1 2
4 .6 P ro c e s s e s i n p l a c e f o r th e h i g h e s t g o ve rn a n c e b o d y to e n s u re c o n f l i c ts o f i n te re s t a re a vo i d e d . 5
4 .7 P ro c e s s f o r d e te rm i n i n g th e c o m p o s i ti o n o f th e m e m b e rs o f th e h i g h e s t g o ve rn a n c e b o d y 1
4 .8 I n te rn a l l y d e ve l o p e d s ta te m e n ts o f m i s s i o n o r va l u e s 1
4 .9 F re q u e n c y w i th w h i c h th e h i g h e s t g o ve rn a n c e b o d y a s s e s s e s s u s ta i n a b i l i ty p e rf o rm a n c e . 1
4 .1 P ro c e s s e s f o r e va l u a ti n g th e h i g h e s t g o ve rn a n c e b o d y’s o w n p e rf o rm a n c e 1 2
4 .1 1 E xp l a n a ti o n o f w h e th e r a n d h o w th e p re c a u ti o n a ry a p p ro a c h o r p ri n c i p l e 1 2
4 .1 2
E xte rn a l l y d e ve l o p e d e c o n o m i c , e n vi ro n m e n ta l , a n d s o c i a l c h a rte rs , p ri n c i p l e s , o r o th e r
i n i ti a ti ve s to w h i c h th e o rg a n i z a ti o n s u b s c ri b e s o r e n d o rs e s .
4 .1 3 M e m b e rs h i p s i n a s s o c i a ti o n s 2 7
4 .1 4 L i s t o f s ta k e h o l d e r g ro u p s e n g a g e d b y th e o rg a n i z a ti o n . 8
4 .1 5 B a s i s f o r i d e n ti f i c a ti o n a n d s e l e c ti o n o f s ta k e h o l d e rs w i th w h o m to e n g a g e . 8
4 .1 6 A p p ro a c h e s to s ta k e h o l d e r e n g a g e m e n t 8
4 .1 7 K e y to p i c s a n d c o n c e rn s th a t h a ve b e e n ra i s e d th ro u g h s ta k e h o l d e r e n g a g e m e n t, 8
1 2
2 7
35
GRI performance indicator
GRI
Performance
Indicators
EC1
EC7
Contents
Direct economic valuegenerated and distributed, including revenues, operating
costs, employee compensation, donations and other community investments,
retained earnings, and payment to capital providers and governments.
Procedures for local hiring and proportion of senior management hired from
the local community at significant locations of operation.
EN1 Materials used by weight or volume 15
EN3 Direct energy consumption by primary energy source. 16
EN4 Indirect energy consumption by primary source. 16
EN8 Total water withdrawal by source. 17
EN16 Total direct and indirect greenhouse gas emissions by weight 17
EN21 Total water discharge by quality and destination 17
EN22 Total weight of waste by type and disposal method 18
Pages
12
13
LA1 Total workforce by employment type, employment contract, and region 23
LA2 Total number and rate of employee turnover by age group, gender, and region. 23
LA4 Total number and rate of employee turnover by age group, gender, and region 28
LA7
Rates of injury, occupational diseases, lost days, and absenteeism, and total
number of work-related fatalities by region
LA14 Ratio of basic salary of men to women by employee category. 26
HR4 Total number of incidents of discrimination and actions taken. 27
HR5
HR6
HR7
SO8
PR9
Operations identified in which the right to exercise freedom of association and
collective bargaining may be at significant risk, and actions taken to support
these rights.
Operations identified as having significant risk for incidents of child labor,
and measures taken to contribute to the elimination of child labor.
Operations identified as having significant risk for incidents of forced or
compulsory labor, and measures taken to contribute to the elimination of
forced or compulsory labor.
Monetary value of significant fines and total number of non-monetary
sanctions for non-compliance with laws and regulations.
Monetary value of significant fines for non-compliance with laws and
regulations concerning the provision and use of products and services.
23
28
29
29
28
30
36